I knew they would come in and support the market soon. Was able to cover my shorts with a small profit assuming this. This is too obvious--key points defended on high volume. They can only prolong the inevitable so long. Just didn't have the guts to go long (I know, I know, we are oversold and it's a technical bounce ) Interesting article on the bursting of the housing bubble. I wonder how they will artificially support its collapse? Negative interest rates? http://www.gold-eagle.com/editorials_02/nystrom122702.html
Why is the collapse of the housing market a forgone conclusion? Housing prices are cooling, they will probably reverse, but a collapse??? How much,30%? 50%, do I hear 96%? Housing prices cool slowly in the mainstream market and they go down slowly. It could 5 years for prices to shed 20% in the core market, the market which house 80% of Aamericans. The 10 million dollar beach house built on spec will take the biggest hit. The second homes that people could scarcely afford will compete with each other for buyers. The 4 bedroom house with .75 acres in the suburbs in an excellent school district will be the most resitant to downward change. Any jackass can publish an article on the internet. There should be a sit on the internet that keeps track of them. Jackass - The Website. His example of the Seattle Condo is an exception, not a rule, and those cities that had huge price bursts (no pun intended) will take good size hits, probably. NYC for example, has had a big run in prices since 1996, but population growth has far outstripped new housing. Don't forget that the GDP is net positive, even though employment is shrinking. Economic activity is probably shifting in region and industry, and that will have an impact on housing.
I think its the big picture, not just housing. The government keeps stepping on the balloon and the bulge shifts to the area of least resistance. With consumers leveraged to the hilt, interest rates at their lowest point, US consumers driving the whole world economy--but having their jobs constantly moved overseas--our prosperity is going to implode and there will be a loud sucking sound as our financial system is undermined. Just like a 3-yr old on a teeter-totter with a 400-lb gymnast, our leverage will come back to bite us. Maybe we can pull out of this and go another cycle, but it doesn't look like it.
The boneheads in our government need to pass legislation to stimulate businesses. They need to do something for the American people and not their re-elections.
Will we get a good bounce after today? From the charts it looks like today we touched support (thanks to the PPT I believe), and the market should pop up again fulfilling the January effect. If not things don't look pretty.